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Topic : Indian Toy Industry Makes a Powerful Push into the UAE Market

GS-3 Mains  : Economy

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Indian Toy Industry Makes a Powerful Push into the UAE Market

• The Indian Toy Industry Association (TAI) is making a strategic move to capture a larger share of the United Arab Emirates (UAE) toy market.
• This delegation, comprised of manufacturers, importers, exporters, retailers, and toy testing lab designers, signifies India’s intent to become a major player in the global toy industry.

A Thriving Domestic Market and Export Ambitions

• India’s toy industry is experiencing phenomenal growth. According to the Ministry of Commerce and Industry, toy exports have surged by 60% in the past five years, reaching $325.72 million in 2022-23.
• This impressive growth is coupled with a significant decline in toy imports (57%), highlighting a growing domestic industry and a potential for further export expansion.
• The industry is projected to reach a value of $3 billion by 2028, with a Compound Annual Growth Rate (CAGR) of 12%. Key production centers are concentrated in Maharashtra, Karnataka, Tamil Nadu, and clusters across central India.

India’s Competitive Advantages

Several factors contribute to India’s potential dominance in the toy sector:

• Resource Rich: India boasts the world’s second-largest production capacity for polyester and related fibers, crucial for plush toys. Additionally, the country has a ready supply of plastics, paper boards, and textiles at competitive prices.
• Cost Advantage: India’s comparatively lower labor costs compared to other major toy-producing nations make it an attractive manufacturing destination.
• Government Support: The “Vocal for Local” initiative provides comprehensive support through the National Action Plan for Toys (NAPT), involving over 20 ministries and departments. This plan includes:
  • Increased import duty on toys from 60% to 70% in Budget 2023 to incentivize domestic production.
  • Establishment of over 60 toy clusters across India to attract domestic and global toy manufacturers. These clusters offer infrastructure and resources to streamline production. Examples include a 400-acre cluster by Aequs in Koppal, Karnataka, and a 100-acre facility under development in Uttar Pradesh.
  • Quality Control Order (QCO) on Toys, implemented in 2020, ensures adherence to global safety standards for domestically manufactured and imported toys.
  • Customized state-level incentives, with some states offering subsidies covering nearly 30% of manufacturing costs.

Challenges and the Road Ahead

Despite these advantages, the Indian toy industry faces some hurdles:

• Limited Brand Awareness: Indian toy brands lack global recognition compared to established international players. This necessitates increased marketing and brand-building efforts.
• Fragmented Industry: The industry is dominated by small and medium-sized enterprises (SMEs), hindering economies of scale and investments in research and development (R&D).
• Global Competition: Established players like China and Vietnam pose significant competition.
• Regulation and Standards: Some manufacturers struggle to keep pace with evolving regulations and BIS standards compliance.

The UAE Market and Free Trade Agreements

• The recent Free Trade Agreements (FTAs) between India and the UAE, along with other Middle Eastern countries, offer a significant advantage.
• These agreements grant zero-duty access for Indian-made toys, making them more competitive in the UAE market.

Strengthening the Industry for Long-Term Success

To fully capitalize on these opportunities, India needs to:

• Strengthen Industry Associations: A unified voice for the sector through stronger industry associations will facilitate collaboration among stakeholders and address common challenges.
• Invest in R&D and Innovation: Developing unique and high-quality toys that cater to global trends and preferences is crucial for long-term success.
• Skill Development and Training: Investing in skill development programs will create a skilled workforce to meet the growing industry demands.

By addressing these challenges and capitalizing on its strengths and government support, the Indian toy industry has the potential to become a major global player. The UAE market presents a stepping stone for this ambitious goal, and the concerted efforts of the industry and the government will be instrumental in achieving it.

Source: https://www.newsonair.gov.in/indian-toy-industry-makes-a-strong-push-into-the-uae-market/